I’ve always been motivated by productivity, and it has gotten more intense recently. In my book Give and Take, I quote the psychologist Daniel Kahneman, who says: “Success is motivated by many things but one of the key ones is the necessity of a kind of collective, high-level awareness.”
I have spent a lot of time thinking about collective awareness. When I was starting my company in 2007, my number one goal was making money fast. I wanted to have two companies — me and my colleagues — so I could have more control over our revenue and expense levels. As I moved into my fifth year at my current company, I knew what a struggle it would be to grow rapidly without bringing in support staff and constant changes in product and service capabilities. In other words, I saw the need to recruit more support staff. One of the reasons that taking on more expenses slows down a company is the additional headaches that many employees create, no matter how talented and smart they are.
In the past three years, after I realized that our products would need to keep changing, I hired another group of 20 people. At first, we did this because we needed a way to support their new product development efforts. That was two years ago. In 2017, and this year, we’ve needed to hire more people for products and services that have already been made, but still haven’t launched yet. Each time, we needed to hire three more people to reach an arbitrary goal. Of the 20 people, we have paid 16. Even after paying the wage at the start of the job, we still pay them commissions on revenue, for doing little to no work. We paid them a salary — and then we pay commissions on revenue.
I’ve wondered how I could possibly keep generating revenue faster, with more people, without any strategic planning or cost-cutting, given our top-heavy model. I started out slowly with the most well-regarded hires I could make. Then I realized that I had to go for growth not just at a scale we could reasonably expect, but also at a pace that could sustain the “organizations of one” that I needed. That strategy had been working for a few years, but it stopped being an efficient strategy for me.
Even while I tried to grow organically at every opportunity, I realized that we were growing too fast. I needed to add support staff and new products that required a lot of time and effort to develop. I had to wait until I knew I could justify hiring new people, and wait until I thought I had the bandwidth to hire them fast.
The best way to achieve these goals is to pay them with a methodical, proportional approach. To get that, I started by making a “purpose list”. I gathered all of the groups of people I needed to hire. I then made a proportional plan to hire each one. Each member of my corporate team decided what tasks each person would take on. As soon as that group was complete, I named their position, got their salaries in writing, and paid them, using this process.
Over time, our company has expanded from four people to 65 people, just within the past two years. We’ve done this in a way that has simultaneously kept costs low and proved effective.
The hiring process never strays far from a fixed amount of money in front of me. We can speed up hiring if the budget is not carefully distributed throughout the team. From that group of people, we can reach out to a new group and double down. If we hadn’t chosen this method to recruit employees, we could have found ourselves hiring too many people in the wrong places, at the wrong time. I’m thankful that we didn’t.
The way this process works is just simple enough for someone to understand what it looks like and do it on their own. If someone at our company is thinking about hiring 10 people, I’ll ask them how it would be possible to get to 50 or 100 without draining our existing resources. If they think it would be impossible, they should try it. If we find that the answer is “No,” we’ll help them get to an answer other than 100. If we find an answer that’s too good to be true, we’ll correct.
I think I’m leading my company better and faster by paying people with a purpose, rather than throwing money around and having them focus solely on growth and speed without any realistic goal in mind. A methodical approach has several advantages. It eliminates the need to hire, it reduces the business risks that come from growth, and it protects the company from one-time hiring costs.